Dear Member

This is one of the many emails I receive on garnishee orders. I had to ask the question, are garnishee orders modern day slavery?

Hello Phumelele

Can you please help?

My employee took out a micro loan for R1500 in 2006.

He failed to repay the loan.

Judgement was taken in 2010.

I have just received a garnishee order for R26 283. 00

Excerpts from the legal documents

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Many, many people have garnishee orders where a few thousand Rands suddenly become tens of thousands of Rands and people take many, many years to pay the garnishee orders off. It is poorly paid people with little education that normally apply for such low loan amounts. They become poorer because of the loans and the garnishee orders. Such cases are sadly dealt with on a case by case basis. Please send this to your loved ones, this person and many others like him, are better off with no loans than with a R1500 turning to R26 283.

In essence, this person is paying the R1500 17 times over (R26 283 /R1500 = 17,5)

WHERE TO GO FOR HELP

Please contact the Credit Ombud on 0861 662 837 or ombud@creditombud.org.za. You can also contact the National Credit Regulator complaints@ncr.org.za They offer services free of charge to the public.

Having seen so many similar cases and being aware that some of them are perfectly legal (please remember that while this is grossly unfair, it could be perfectly legal), my humble advice would be:

1.       Keep away from unsecured loans – they are very expensive

2.       Do your very best to pay your debts otherwise you could end up having a garnishee order and paying the debts many times over

3.       Save and buy the things you need in cash rather than buying staff on credit

INVALID GARNISHEE ORDERS

I also want to address employers out there. Not all garnishee orders are valid. Below is a list of invalid garnishee orders which no employer should honour

1.       The law stipulates that a garnishee order must be obtained in courts within the jurisdiction of the alleged debtor’s home or workplace. So if your employee is in Durban and receives a garnishee order from Kempton Park as an example, do NOT honour it.

2.       Credit providers often pay debt collectors and lawyers contingency fees, which can be up to 25% of the outstanding debt. These fees should NOT be added to the debt amount but they often are. This makes the garnishee order invalid and the employer should not pay it

3.       When applying for credit, debtors are asked to sign forms agreeing to judgments and garnishee orders if they fail to pay the debt. But they must still be notified that a garnishee order is being applied for. Creditors and debt collectors cannot simply use this consent form to put a garnishee order in place. Employers should therefore ask debt collectors for proof of having notified the debtor before agreeing to a garnishee order

4.       Some tracing agents who are supposed to obtain the debtor’s signature on Section 58 forms agreeing to judgment simply forge the debtor’s signature. When a debt is prescribed, the only way to obtain a garnishee order against a debtor is if the debtor signs a Section 58 form, consenting to a garnishee order or judgment. Employers should therefore ask for a copy of the Section 58 form and compare the signature on the form with their employee’s signature

5.       A garnishee order is valid only if it is served by a sheriff of the court. Employers should not honour a garnishee order that is faxed or posted

For more details on invalid garnishee orders, please see pages 32 to 36 of the book From Debt to Riches by Phumelele Ndumo, available at CNA and Exclusives bookshops for only R134 a copy

From Debt to Riches

Thank you and Kind regards

Phume